The law firm representing Atlanta developer Shi Shailendra, who was recently ordered to pay real-estate investors more than $3 million, won’t have to pay punitive damages, the investors' spokesman said Wednesday.
However, a Los Angeles jury ruled last week that the Holland & Knight law firm, which has an Atlanta office, must pay $34.5 million in compensatory damages.
Shailendra, a leading business and political figure in Atlanta’s Indian-American community, planned to build a billion-dollar real estate empire in metro Atlanta and Florida. He raised millions of dollars from Indian investors across the United States.
Shailendra’s plans crashed, though, soon after the recession hit in late 2007. The Georgia Tech grad was accused by investors of using money intended for real estate ventures for personal gain. A slew of lawsuits ensued.
Last week, an arbitrator ordered Shailendra to pay the investors more than $3 million, including $250,000 in punitive damages. A Los Angeles jury also found last week that Shailendra’s law firm engaged in legal malpractice and breach of fiduciary duty for not protecting investors from Shailendra’s fraudulent activities.
“Law firms like Holland & Knight need to be very careful when managing client relationships,” said David Ribakoff, the plaintiffs' lawyer. “They led my clients down the path of destruction.”
Michael Chapman, the law firm's general counsel, said in a statement Wednesday that Holland & Knight will appeal the compensatory verdict.
"There is no basis for the imposition of liability on our firm," he said. "The plaintiffs, like many others, suffered losses as a result of the dramatic downturn in the real estate market. The plaintiffs then sought to recover those market-driven losses from our firm, and other law firms. Unfortunately, in this case, they have been permitted to do just that."
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